Home Depot Q2 Earnings Preview: What Investors Should Expect on August 19
Home Depot Q2 Earnings Preview: What Investors Should Expect on August 19
Home Depot Q2 earnings preview
- Home Depot to report Q2 earnings on Tuesday, August 19.
- Improving consumer spending may provide some support for positive guidance.
- Prices have found support at the 9-day EMA and continue to outpace the S&P 500 for August.
Home Depot earnings to offer investors clarity on consumer strength
Home Depot (HD) is scheduled to report second quarter fiscal results on Tuesday, August 19, before the market open.
The earnings will provide investors with information about how consumers are behaving at a time when economic growth uncertainties and tariff-related price increases weigh on consumer sentiment.
Specifically, Home Depot’s results will help shed light on higher-income spenders, given that most goods sold at the retailer fall under discretionary spending.
There is reason for optimism following July retail sales data, which showed that shoppers spent more in July. Retail sales rose 0.5% in July, and June’s figure was revised higher. That was encouraging news for markets, since it shows that consumers are feeling some relief from the initial tariff-induced restraint in spending. However, a recession remains a possibility for the economy.
Still-high interest rates may have posed a headwind for spending at Home Depot during the second quarter. This is because the company relies on home renovators, who usually fund projects via debt such as credit cards. While the outlook for lower rates has strengthened, Home Depot’s guidance will need to reflect a positive tone for the stock price to strengthen.
What do investors expect?
According to TradingView, analysts expect Home Depot’s earnings per share (EPS) to cross the wires at $4.72 for Q2. Revenue is expected to come in at $45.42 billion.
Last year, Home Depot’s EPS came in at $4.67 on $43.17 billion in revenue. In Q1, EPS was at $3.56 on $39.86 billion in revenue.
Home Depot has beaten EPS estimates in three of the last four quarters, while revenue beat in all four quarters.
Trading Home Depot earnings
Home Depot stock was down 0.6% through mid-day trading on Monday ahead of its earnings release. However, the stock trimmed earlier losses and remained above its 9-day exponential moving average (EMA), which has supported prices several times since the start of the month.
The stock is up nearly 8% since the start of August, putting it well above the S&P 500’s gain of 1.77% over the same period. The recent outperformance also poses a risk to the stock in its post-earnings reaction, given that investors may be keen to take profits if Home Depot disappoints.
Home Depot traded with an implied volatility rank (IVR) of 23.4, meaning that volatility is slightly subdued compared to the past twelve months of trading. The options market expects a move of +/- 13.86 points, or 3.5% of Monday's stock price.
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